12 Nov - 2 min read
Indonesia’s top council of Islamic religious leaders, Majelis Ulama Indonesia (MUI), has declared the use and trading of cryptocurrencies as haram based on Islamic principles. This is because it carries elements of “uncertainty, wagering, and harm”.
Asrorun Niam Sholeh, who is the head of religious decree, said that the council had come to this conclusion after holding an expert hearing to discuss the matter. He further commented that if MUI were to approve the trading of cryptocurrencies as a commodity or digital asset, it must be proven to abide by shariah guidelines and show a clear benefit.
This latest statement by MUI is not the first time that the Islamic religious body in Indonesia has pushed back against the trading of cryptocurrencies. Back in October, MUI’s East Java provincial branch had issued a fatwa to declare the use of cryptocurrency as haram.
That said, these statements by MUI’s are not legally binding as they do not translate to government policy changes. In fact, the Indonesian government itself has thus far been fairly open to cryptocurrencies as a form of digital asset (but not as legal tender). However, given MUI’s position as the highest authority on shariah compliance in Indonesia – with the country’s Ministry of Finance and central bank often seeking its opinion on Islamic finance issues – the latest decree could dampen sentiments among Muslim investors as well as cause local institutions to reconsider issuing crypto assets.
Indonesia – which is the world’s largest Islamic country – recorded cryptocurrency transactions amounting to 370 trillion rupiah (equivalent to US$26 billion) during the first five months of 2021. Meanwhile, cryptocurrencies have been on a bull run over the past few months after several historic events, including El Salvador’s adoption of Bitcoin as legal tender, the successful rollout of an Etherum network upgrade, and the launch of the first Bitcoin-linked exchange traded fund (ETF). Bitcoin also hit its latest all-time high of US$69,000 (equivalent to about RM287,350).
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